US Federal Reserve meets with small rate cut expected

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US Federal Reserve policy-makers began meeting against the backdrop of a still-plummeting US housing market that is sapping consumer optimism and may require more interest-rate tonic.

The US central bank's Federal Open Market Committee began a two-day meeting with futures markets betting that it will announce a quarter-percentage-point cut in rates.

That would be on top of a surprise half-point reduction the Fed made on September 18 to its trend-setting federal funds rate for overnight loans between banks and would bring the key rate to 4.5 per cent, its lowest since March 2006.

There was a only a slight doubt in financial markets whether policy-makers would cut rates on, with futures markets pricing in more than a 90 per cent chance for a small reduction. © 2007 Australian Broadcasting Corporation

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